City of St. Paul Inspection Dept to go to trial for Fair Housing violations.

Federal Court of Appeals ruled today that the combined cases of Gallagher, Steinhauser,Harrilal (rental property owners) vs St. Paul will go to trial.

This is a very important case on code enforcement being used in a discriminatory manner. Continue on to read the highlights with inks to the most recent decision.

This case alleges that St Paul housing inspection programs were used in a racially motivated manner to force racial minorities out of St Paul and that such actions violated the Fair Housing rights of the occupants.

A very interesting point is a number of city employees including inspectors are on the hook personally in this suit. From a legal perspective each city employee must defend themselves as they, their co-workers and their employer have disparate interest.

For the city to win if the allegations are proven true they must claim rouge employees were acting outside of the law and contrary to department policy. For the inspectors to win they must argue that they were following instructions from their supervisors that they believed were legal.

At some point the inspectors will have to name their union as third party defendants as the union failed to stop management from allowing/forcing them to violate the rights of the tenants and owners

The inspectors may have a hard time claiming ignorance however as the owners had provided the inspectors with documentation that the inspectors’ acts were contrary to Fair Housing, yet the inspectors continued with their agenda.

From my conversations with two of the plaintiffs over the past five or six years they seem to be just a handful of hard working landlords who independently found themselves on the losing end of government behaving badly. The current case is a consolidation of three or four cases that started independent of each other, but the claims were so similar that the federal court combined them. Most of the cases claimed RICO (racketeering) on the part of the city employees.

Much of this is so similar to what we are seeing in Milwaukee.

Note the vacant building ordinance for example. Our former Commissioner of Neighborhood Services had a number of conversations with his counterparts in MN, and proposed a number of ordinances that were based on what was on the books there.

Here is an except from today’s ruling

To demonstrate a disparate impact, Appellants have offered evidence supporting the following conclusions:

(a) The City experienced a shortage of affordable housing. The City represented in its 2003 report to the U.S. Department of Housing and Urban Development (“HUD”) that “the lack of affordable housing opportunities remains a major issue facing many Saint Paul lower income households, who are also protected class members,” and that “27.6% of Saint Paul’s lower income residents cannot find adequate affordable housing in the City.” Then, in 2005, the City estimated that 32% of the households in St. Paul had unmet housing needs (cost burdens, overcrowding, etc.).

(b) Racial minorities, especially African-Americans, made up a disproportionate percentage of lower-income households in the City that rely on low-income housing. The district court noted that the parties agree that African-Americans make up a disproportionate percentage of low-income tenants in the City. The City’s 2000 census data showed that 11.7% of the City’s population was African-American, whereas data from October 2004 showed that 61% and 62% of those on waiting lists for public housing and Section 8 assistance, respectively, were African- American. Further, the City’s 2000 report to HUD showed that 52% of minority-headed renter households were in the bottom bracket for household adjusted median family income, compared to 32% of all renter households.

(c) The City’s aggressive Housing Code enforcement practices increased costs for property owners that rent to low-income tenants. Appellants produced at least six affidavits describing the toll that the City’s aggressive Housing Code enforcement took on their rental business. They reported a substantial increase in costs, resulting in evictions for tenants and “forced sales” of their properties in some cases. These allegations are corroborated by an internal memorandum from the City’s fire marshal in 1995, comparing the Housing Code and the HQS and concluding that the Housing Code was more strict in regard to 82% of the examined categories.

(d) The increased burden on rental-property owners from aggressive code enforcement resulted in less affordable housing in the City. Documents from the City and the Public Housing Authority acknowledged that any decrease in federally assisted rental housing would reduce the amount of affordable housing in the City. Those predictions were supported by the City’s Vacant Buildings Report, which showed that the number of vacant homes listed in the City rose from 367 to 1,466 between March 2003 and November 2007, which was a nearly 300% increase. Further, Appellants submitted affidavits from three tenants who alleged that they endured hardship when their homes were condemned for minimal or false Housing Code violations.

These premises, together, reasonably demonstrate that the City’s aggressive enforcement of the Housing Code resulted in a disproportionate adverse effect on racial minorities, particularly African-Americans. Viewed in the light most favorable to Appellants, the evidence shows that the City’s Housing Code enforcement temporarily, if not permanently, burdened Appellants’ rental businesses, which indirectly burdened their tenants.

A set of lawsuits alleging St. Paul’s housing-code enforcement discriminated against black tenants was given new life Wednesday when a federal appeals panel reinstated a portion of the case.

The allegations “reasonably demonstrate that the city’s aggressive enforcement of the housing code resulted in a disproportionate adverse effect on racial minorities, particularly African-Americans,” a three-judge panel for the 8th Circuit Court of Appeals wrote in overturning part of a 2008 dismissal of the case by U.S. District Judge Joan Ericksen.

4 Responses to “8th Circuit Court of Appeals rules in favor of landlords”

I read the City’s brief supporting the En Blanc motion. There is one sentence in the City brief that kind of tells how they really feel:

“This ruling may have the unintended result of promoting segregation. Why live in a city that cannot enforce its code because of the shortage of affordable housing and the existence of a minority
population?”

Disclaimer

I am "just a landlord," NOT an attorney or accountant. If you need legal advice, tax advice or have appendicitis, don’t rely on something you read on the internet and do it yourself. Rather, hire a competent professional.